LOAN MODIFICATION foreclosed properties.
But anyone who has attempted a mortgage modification knows firsthand the frustration of submitting an application to the servicer.
Over and over, the servicer claims that you haven’ t sent the documents, or the documents are stale or incomplete.
That inability to account for the modification application documents is, I’ m afraid, just a sneak-peak at the next mortgage horror:
· Servicers have no records about the loans they did modify.
· Or, more precisely, the records they have are not to be trusted.
Rotten Record Keeping
The casualness with which servicers approached modifications has scared me for some time.
· modification agreements were poorly drafted
· borrowers never got copies signed by the lender
· changes in terms not part of public record
The quality of the customer interface at the servicer was laughable, if it wasn’ t frightening.
The problems are compounded when the servicing on loans changes hands.
The new servicer starts with the ending balances from the prior servicer. Few records other than an electronic data base change hands. Any mistakes made by the prior servicer are now impenetrable.
The terms, or maybe even the enforceability of the modification itself, are lost in the mists of time.
Practice Self Defense
Who knew that homeownership was going to be a contact sport?
But your clients have to assume, if they got a loan modification, it will be up to them to defend the modification when the time comes to pay it off.
Here’ s the homeowner’ s two step:
1. Keep good records- find and preserve the loan modification agreement. Treat it as being just as important as the deed to the home.
2. Request mortgage accounting each year- make an annual request for the state of your loan, and preserve the response
The goal is to have your own records supporting the terms of the loan modification and to catch any problems in accounting early.
May all the lender’ s mistakes cut in your favor and may the Force be with you.
You’ ll need all the help you can get.
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National Association of Consumer Bankruptcy Attorneys Fall 2016 CONSUMER BANKRUPTCY JOURNAL 33